LEC III - MEANING OF THE BOP

LEC III - MEANING OF THE BOP - with a surplus lends in that...

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The Meaning of the BOP Or why I torture you with this stuff
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The CAB Equals the country’s net foreign investment (I f ) because If CAB is in a surplus KAB is in deficit Capital account outflows inflows Net foreign outward investment If CAB is in a deficit KAB is in surplus Capital account outflows < inflows Net foreign inward investment
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The CAB and IIP A country with a CA deficit ends up borrowing in the international markets and a country
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Unformatted text preview: with a surplus lends in that year. (Capital flows) The U.S has borrowed for the last 20 years and has switched from being a net creditor to becoming a net debtor to the world. (Capital stocks). But the U.S is a net creditor in its direct investment by multinationals. It is a net debtor in portfolio investments. Most foreign portfolio investment in the U.S goes to buying governmental debt....
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This note was uploaded on 11/07/2010 for the course ECON 0001 taught by Professor Kitsikopoulos during the Spring '08 term at NYU.

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LEC III - MEANING OF THE BOP - with a surplus lends in that...

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